Economic Overview, Riga Commercial Capital & Baltic Tech Hub
Latvia is the central logistics, aviation, and shared service center of the Baltics, offering elite software developers and multilingual talent.
Key Economic Sectors
- FinTech & Shared Services: Leading P2P lending platforms, financial shared service centers, and custom enterprise software in Riga.
- Aviation & Regional Logistics: Baltic aviation hub (airBaltic) and deepwater ice-free ports (Riga, Ventspils, Liepāja).
- Timber & Advanced Materials: High-value engineered wood exports and micro-optics/drone technology.
Employment Contracts, Labour Law (Darba likums) & VID Registration
Regulated by the Latvian Labour Law (Darba likums).
- Mandatory VID Registration: Employers must register every employee with the State Revenue Service (VID) no later than **1 day before work begins**.
- Probation Period: Maximum statutory probation is 3 months.
Working Hours, Overtime Multipliers & Rest Periods
- Standard Hours: 40 hours per week (8 hours/day over 5 days).
- Overtime Surcharges: Minimum 200% (100% premium / double time) of normal hourly wage under Article 68 of the Labour Law (or 50% under compliant collective agreements).
Annual Leave (4 Weeks), Public Holidays & Maternity Protections
- Annual Paid Vacation: Minimum 4 calendar weeks (20 working days) per year of continuous service.
- Public Holidays: ~12 to 14 official national public holidays (including Midsummer / Jāņi on 23–24 June).
- Maternity Leave: 112 calendar days (16 weeks) (56 prenatal + 56 postnatal) paid at 80% via VSAA social security.
- Paternity Leave: 10 working days paid via VSAA.
Social Insurance (VSAOI 23.59% Employer) & VID Income Tax
| Statutory Scheme | Employer Share | Employee Share | Coverage |
|---|---|---|---|
| State Social Insurance (VSAOI) | 23.59% | 10.50% | Pensions, health, disability, maternity & unemployment (34.09% total) |
Personal Income Tax (IIN): Progressive rates: 20% (up to €20,004/yr), 23% (€20,004–€78,100), and 31% on excess, remitted monthly to VID.
Termination, Notice Periods & Severance Pay
- Notice Periods: 1 month standard notice for employer-initiated dismissal.
- Severance Pay: 1 month's salary (tenure < 5 yrs), 2 months (5–10 yrs), 3 months (10–20 yrs), up to 4 months' salary (>= 20 yrs service).
Why Use an Employer of Record (EOR) in Latvia
- Rapid Regional Hiring: Onboard software engineers and financial analysts in Riga in days.
- VID & VSAOI Compliance: Automated management of 23.59% employer social charges and progressive IIN tax withholdings.
- EU Blue Card & Residence Permits: EOR manages Office of Citizenship and Migration Affairs (PMLP) work permits.
Hiring in Latvia? Key Resources
Whether you are evaluating entity setup vs. using an Employer of Record, or looking for the best international payroll solution, our guides give you transparent benchmarks:
